Prioritizing Your Future

Prioritizing Your Future

Depending on where you are in the lifecycle of your practice, retirement may be a fuzzy, far off vision of ease and travel. Or, it may be beckoning just over the horizon – a call you either welcome or hear with trepidation.

For chiropractors, the ability to be in control of when and how you retire is especially crucial. Why? Because this healing profession carries with it some inherent risks that can affect when and how you leave the workforce. A physically demanding occupation, your physical fortitude may in part dictate how long you can practice. As well, most chiropractors are small business owners, so the ability to step away from the daily grind will be directly related to how savvy you have been at managing your practice. The power to retire well requires preparation – years of thoughtful planning that results in the ability to enjoy, even relish, your post-working years.

People are living and working longer than ever before. A recent survey found that 46% of Americans are planning on retiring after age 65, while only 30% expect to retire before it[1]. In a parallel finding, according to the National Board of Chiropractic Examiners 2015 report, chiropractors’ longevity in the practice is increasing – 38.3% of practitioners worked more than 25 years in 2014, up from 24.7% in 2009.[2] The good news here is that working longer gives practitioners more time and flexibility to save for retirement.

Prioritizing Saving

Saving for retirement means different things at different points of your career. It can be tempting to overlook this eventuality when you’re young, although the earlier you start saving, the more powerful and flexible your money will be. Chiropractors just out of school are commonly more concerned about setting up or joining an established practice than putting aside money for the far-off future. This is understandable, but saving early on leverages the power of compound interest to transform even a modest amount of money into a solid nest egg.

Even so, many professionals still neglect to save money for the future. For ambitious chiropractors, it can especially take discipline to set aside funds that could also be used to expand a business, buy that cutting-edge imaging tool, or take a much-deserved vacation. That said, the initial discipline it takes to start saving right out of school – a rule of thumb is to save 10% of your income – is key because it transforms resistance into habit. And this ability to prioritize saving pays off down the road.

Why the Rubber Doesn’t Meet the Road

Clearly, saving for a secure and fulfilling retirement is a good idea. So why do so many people neglect to save for their futures? According to The Strategic Chiropractor, only 5% of chiropractors can afford to retire by age 65[3]. This dismal statistic points to some hard truths of being a practicing chiropractor: for all the healing done for others, too rarely do chiropractors focus on ensuring their own futures. After all, chiropractors are trained to work with the human body – a much different skill set than running a business or investing wisely. When faced with the practicalities of payroll, hiring and firing, bookkeeping, and insurance, many chiropractors feel overwhelmed and out of their depth.

Here, two scenarios diverge. In the first, many chiropractors grossly underestimate how much they will need to retire. They assume that given what they’ve saved in Social Security along with some modest investments or savings and they’ll be fine. It’s easy to think “Oh, I’ve saved $1 million so I have plenty of money to live on for the rest of my life.” This may or not be the case, but you won’t know for sure until you’ve run the numbers and taken into consideration things like health care, inflation, periodic car purchases, vacations and much more. And these concerns are all on top of general living expenses.

Being unprepared for the realities of your expenses in retirement is scary enough. But worse, for many chiropractors, is a second scenario – they haven’t considered retirement saving at all. Distracted by the daily tasks of running a business, seeing patients, and trying to live well in the present moment, they typically don’t prioritize saving until they are getting close to retirement age. But now, there are limited options such as working longer or trying to live on less than they are used to.

Danger! Danger!

If you assume your chiropractic business is going to leave you with a large lump sum of cash when you sell it at retirement, think again. When selling a practice, too often the expectations do not align with the realities. The fact is, most chiropractors who rely on the sale of their business to fund their retirement are forced to either retire with meager funds or work longer than they had anticipated. Why?

One reason has to do with the realities of the post-Great Recession lending market. A young, ambitious chiropractor, likely saddled with his own school debt, is simply not going to be able to borrow what he needs to purchase your half a million dollar practice. According to Dr. James Fedich, author of Secrets of a Million Dollar Practice, a single-doctor practice would be lucky to sell for 80% of its annual gross collections. And that’s the best-case scenario, as many go for much less. There is much involved in selling a practice – location, condition of equipment, staff and patient retention, negotiating a buy-in or co-ownership, and more. A professional practice consultant like The Strategic Chiropractor (www.strategicdc.com) can help you appraise your practice in order to assess its true market value so you can approach selling with your eyes wide open.

Help is on the Way!

So, you’re committed to setting aside money for retirement. Bravo! This can involve a variety of strategies, depending on your comfort with risk, or vice versa. Like the body, everyone’s financial life is unique and requires a steady maintenance regimen. Your money and your priorities change over time, and – to continue the metaphor – need more than a one-time adjustment. As a chiropractor, you understand the danger of self-diagnosis. In financial matters, and especially a crucial concern like a happy and secure retirement, it’s no different.

Few chiropractors (regardless of their levels of education and intelligence) should be their own investment managers, let alone “Wealth Manager”. Strategizing for your optimal retirement in conjunction with a well thought out and written investment plan is constant and demanding work. And it often can require nerves of steel during difficult market conditions. How many chiropractors at the end of a hard day of work and with precious little time will have enough energy, focus, and cool perspective to manage the investments that are key to their financial futures?

For many chiropractors, hiring a trusted personal and business Chief Financial Officer who can be a true partner in planning for the future is at first intimidating, but then garners feelings of massive relief and less sleepless nights. When your money is in the hands of an expert, one who is coordinating with your accountant, lawyer and insurance professional, nothing falls through the cracks. And you can focus on what you are truly passionate about – healing.

Todd Calamita is a Certified Financial Planner® with Calamita Wealth Management Inc., which provides wealth management solutions to individuals, families and business owners. In solving his clients’ biggest financial concerns, Todd offers insight and experience that go beyond simply rendering investment advice to create a better future for successful Chiropractors. Calamita Wealth Management Inc. is a Registered Investment Advisor, which also does business under the name Chiropractic Wealth Management.